Weichai Power: Center Daily News-than-expected Stock Price Significantly Undervalued - Weichai Power

We report on August 4, "Weichai Power - industry create profit and valuation recovery

rally" in the company's investment rating raised to "strong recommendation", the 29th release Weichai Power Company reported results for a little more than we expect, and is widely expected to substantially exceed the market; in heavy trucks and construction machinery market has recovered the background, taking into account the company's core competitive advantages highlighted, we raised 2009, 10 profit and the EPS were 3.49 yuan to 3.05 yuan, the current share price significantly undervalued We maintain our "highly recommended-A" investment grade.

Engine Pin Volume of cases better than the industry reflects the competitive advantage. First half of the heavy truck industry sales of 27.4 million vehicles, down 28% year on year, industry sales of 48 100 large loaders, down 29.9%; first half of the sales engine 149,000, down 26.6%, slightly better than industry conditions; Shaanxi Heavy Duty Truck Heavy Truck sales 27,500, down 35.7%; Shaanxi Fast Transmission sold 235,000 units, down 29%. In the first half operating income 15.8 billion yuan, down 24.7%.

Better second quarter gross margin recovery. Weichai Power Company in 2009 in the first half net profit 1.22 billion yuan, down 24.7%, corresponding to EPS of 1.47 yuan, of which a quarter and second quarter EPS were 0.43 yuan and 1.03 yuan; company, one quarter and second quarter gross rates were 19.7% and 22.7%, gross margin recovery is better, we expect the company in 2009 full year gross margin level of 21.3%.

Industry recovery is the basis for improved company performance. At the national implementation of the "investment-led economy" policy stimulus, the government investment will continue to invest, private speculation is expected to start, fixed asset investment growth is expected to continue to maintain a high level of growth, demand for heavy trucks and construction equipment continued to stimulate the formation, In addition to tractor trailer represented logistics market recovery will drive improved sales of heavy truck industry. The fundamentals to good overall income and net income improved the company's foundation.

2009 EPS is expected to reach 3.05 yuan. Weichai Power Company EPS was 1.47 yuan in the first half, we expect the second half of heavy trucks and construction equipment industry sales will continue to improve, the situation of strong demand in the industry, the company has the ability to transfer some costs to downstream customers, high margin levels will be sustained.

Maintain "highly recommended-A" rating. Heavy truck and construction machinery industry recovery will lead to improved performance of the company, while growth is expected to amend the future performance will also lead to rebound in valuations; current price corresponds to 09 and 10 years were 13.5 times EPS and 11.8 times the company's core product - high-power engine and gearbox technology-intensive, competitive advantage is obvious, the company should enjoy a relatively high valuation, we continue to maintain a "strong recommendation-A" investment grade.

by: gaga

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